Softwood Lumber, Particle Board, and Plywood Price Index 2012-2024

Across the past decade the construction industry witnessed a 49.5% increase in the costs of building single-detached homes, largely due to the soaring prices of softwood lumber, which more than tripled between June 2020 and May 2021. Costs still remain inflate by 26% compared to pre-covid levels. This price surge was a consequence of increased demand for new homes and home improvement projects, fueled by lower interest rates. However, the supply of softwood lumber struggled to meet demand due to mill closures, curtailments, and natural constraints such as fires and insect infestations. As a result, prices saw a drop in July of 2021 and nearly as historic recovery by March 2022. While cooling off, 2023 prices going into 2024 still remain highly elevated compared to pre-covid prices and indicate steady growth.

This analysis concentrates on the price dynamics within the domestic lumber supply chain, important for stakeholders in the construction and secondary wood manufacturing industry. It reveals that despite the significant hike in producer prices, the increase was not fully transferred to consumers. This was because wholesalers and retailers chose to reduce their markups in an effort to stay competitive, though they still managed to earn a higher gross profit per lumber unit sold. Understanding the connection between how activity in the construction industry drives the price of lumber, and how that driving force effects other tangential industries (such as panel production, which can come from logs classed after dimensional lumber or offcuts from dimensional lumber. For the secondary wood manufacturing industry, understanding these supply chain dynamics and price movements is crucial for navigating volatile market conditions and planning for procurement and production activities effectively.


Key context:

Price Index Monitoring: The price movements are tracked using several indexes, including the Raw Materials Price Index (RMPI) for logs, the Industrial Product Price Index (IPPI) for softwood lumber producer prices, and the Wholesale Services Price Index (WSPI). The Building Construction Price Index (BCPI) measures overall construction cost movements, providing a comprehensive overview of price changes across the supply chain.

Market Fluctuations: The initial rise in softwood lumber prices was triggered by an uptick in housing starts and home improvements, leading to a 22% increase in July 2020. However, production disruptions due to the pandemic and other logistical challenges led to a supply shortage, exacerbating the price inflation.

Adjustment in Market Dynamics: Although producer prices for lumber saw unprecedented growth, reaching a peak increase of 209% by May 2021, this trend saw a correction with a 53% price drop by August 2021 as market demand adjusted and supply constraints eased slightly.

Current Trends: As of January 2024, producer prices for lumber were again on the rise, indicating ongoing volatility in the market due to factors like robust construction demand in the U.S. and localized supply issues.

Softwood lumber prices, influenced by both upstream and downstream developments, have shown significant volatility. Upstream, higher log costs and demand for construction materials led to producers increasing prices. Downstream, a surge in building permits signaled future construction expansion, prompting lumber producers to raise prices in anticipation of higher demand.

However, these price changes were not uniformly transmitted across the supply chain. Wholesalers and retailers, in an effort to stay competitive, did not fully pass on the increased costs to consumers, resulting in an uneven distribution of price hikes. Notably, wholesale prices for lumber and veneer products saw a peak increase of 132% above June 2020 levels, while retail prices for dimensional lumber increased by 86% over the same period, underscoring the partial absorption of costs by intermediaries.

From 2012 to 2024, significant volatility has been observed in the prices of Softwood Lumber, Particle Board, and Plywood. Softwood Lumber experienced dramatic price surges, notably between 2020 and 2021, due to increased demand for new homes and home improvement projects, compounded by supply chain disruptions. In contrast, Particle Board showed a slight downward trend in its Year-Over-Year (YOY) price changes, indicating potential stabilization within its market. Plywood prices remained relatively stable overall, exhibiting less variability in YOY price changes despite experiencing some annual fluctuations.

Supply Chain Dynamics and Price Movements

  • Influence on Prices: Lumber prices are influenced by a variety of factors, including input costs (e.g., logs) and market demand, signaled by activities like building permits. This creates a balance of cost-push and demand-pull inflation.
  • Uneven Transmission: Notably, price increases from the producer level did not uniformly pass down through wholesalers to retailers. Wholesalers and retailers adjusted their markups to stay competitive, leading to a less than proportional increase in consumer prices.
  • Temporal Lag: The response of raw material prices (logs and bolts) to changes in lumber prices demonstrates a lag, indicating an imperfect price transmission from producers to raw materials. Despite this, raw material prices saw significant increases over time.

Sector-Specific Observations

  • Manufacturing Spike: A substantial rise in lumber prices in 2020 originated at the manufacturing stage, driven by an imbalance in supply and demand due to the pandemic. This period saw producer prices for lumber increase significantly. 2024 Trends show a significant cooling off with panel costs more closely inline with historical deviations. A notable outlier is the significant drop in veneer and plywood products.
  • Wholesale Strategy: Wholesale price movements largely mirrored those of producers, with prices peaking and then moderating together. Wholesalers managed their margins by not fully passing cost increases onto retailers, yet achieved higher gross profits during peak price periods.
  • Construction Costs: The impact on construction, especially single-detached homes, underscores the unique position of wood within the construction materials market. A significant portion of the rise in construction costs was attributed to the wood, plastics, and composites division, highlighting the direct impact on the secondary wood manufacturing industry.

This analysis underscores a critical period where demand surges and supply constraints led to record lumber prices. For industry stakeholders, navigating this landscape requires a multifaceted approach. Dynamic pricing strategies and robust cost management practices are essential for adjusting to raw material cost fluctuations. Strengthening supply chain resilience, such as through diversifying suppliers or investing in inventory management solutions, can mitigate the impacts of these fluctuations. Additionally, a continuous focus on market monitoring and forecasting can inform more effective procurement and production planning. Exploring alternative materials or sourcing strategies may also serve as a hedge against market volatility, enabling businesses to maintain operational flexibility and competitiveness in a challenging market environment.


Statistics Canada. Table 18-10-0266-02  Industrial product price index, by product, percentage change, monthly


Statistics Canada. Table 18-10-0266-01  Industrial product price index, by product, monthly


Statistics Canada. Table 18-10-0268-02  Raw materials price index, percentage change, monthly




Tyler Holt is the Editor of Wood Industry / Le monde du bois magazine. He has a master’s degree in literature and publication, and years of experience in the publishing and digital media industry. His main area of study is the effect of digital technologies on industrial and networked production

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